Xstate Resources and Elixir Energy Discover Substantial Gas Column at Diona-1 Well

Xstate Resources (ASX: XST) and farm-in partner Elixir Energy (ASX: EXR) are eagerly seeking further data after drilling into a significant gas column at the Diona-1 well in the onshore Surat-Bowen Basin in Queensland.

While the partners found the well’s primary target to be non-hydrocarbon bearing, they subsequently encountered a 181-metre hydrocarbon prone permian-to-basement sequence at a depth of 2,479m.

This zone included a significant over-pressured gas column and a “kick” that required increases to drilling mud weights and circulation of gas out of the hole.

Farm-in Agreement

The Diona prospect is a shallow gas/oil target adjacent to the pipeline joining the Silver Springs gas plant and the Waggamba gas field in the Surat-Bowen Basin of Queensland.

Xstate – which is fully carrying Elixir for the Diona-1 drilling as per the agreement the companies signed earlier this year – spudded Diona-1 in late September.

“The Diona-1 well has proven the presence of moveable hydrocarbons across an unanticipated column of the Permian section of this well,” Xstate managing director Andrew Bald said.

“We cannot rule out that Diona-1 has intersected the updip edge of the Taroom Basin centred gas play, which could offer us the opportunity to prove up a significantly larger unconventional resource.”

“The strategy of targeting a multi-stacked play has paid dividends and early signs are that this could be a remarkable outcome for the team and the company.”

Hydrocarbon Reservoirs

Preliminary logging-while-drilling data indicates that several permian-aged hydrocarbon-bearing reservoirs are present that will require additional testing.

Elixir chief executive officer Stuart Nicholls said preliminary observations boded well for the project’s future.

“The acquisition of additional information from Diona-1 is critical for the declaration of a discovery which could have material regional impacts across the known plays in the area,” he said.

Drilling operations will now focus on the completion of the well, followed by a wireline logging campaign to acquire the additional data before the release of the final interpreted results.